18 Jun 2015

Report reveals SDHB 'systematic deficiencies'

10:14 am on 18 June 2015

A confidential report on problems at the Southern District Health Board reveals some of the reasons behind the board's sacking.

Radio New Zealand has obtained the draft report by the chief executive of the Nelson Marlborough DHB, Chris Fleming, which concluded there was an urgent need to fix the Southern DHB board's operations and reform the way the DHB managed its finances.

Dunedin Hospital.

Dunedin Hospital. Photo: RNZ / Ian Telfer

Health Minister Jonathan Coleman yesterday dismissed the board and replaced it with a commissioner, saying he lost confidence in it after it predicted deficits next year surpassing $30 million.

Mr Fleming spent two weeks reviewing the Southern DHB's financial operations in March.

His report said the board had not been presenting a strong, consistent and united voice to the community, staff and Government about what it was doing, and especially the tough calls needed to get its finances in order.

He pointed to controversial board decisions about neurosurgery services and the outsourcing of hospital kitchens, some of which have been reversed under community pressure.

Mr Fleming said unless the board took decisive actions and backed its managers to the hilt, staff were reluctant to propose vital long-term, beneficial changes for fear of the reaction.

Financial diagnosis

Mr Fleming also found systematic deficiencies with the DHB's financial and budget setting processes.

The board only saw monthly financial reports five weeks after the end of a month, which was too slow if any urgent correction was required. That same reporting only took three weeks at his own DHB.

The report also found the annual budget was months behind where it should be so a draft budget went to the minister with mistakes and sections unchallenged by the board.

Mr Fleming said the way the annual budget was built up was flawed and needed to be overhauled.

He also said the board was counting $10 million in vacancy savings - money saved from not filling jobs - but that was a dubious practice because the savings were uncertain.

Mr Fleming said there may be some under-funding of the DHB, but it needed to let other people sort that out, not it as an excuse for failing to fixing its internal problems.

DHB reaction

A Southern DHB spokesperson said it regarded the report as only a draft, which will not be finalised for another two weeks.

He said DHB management was challenging some of the figures, and expected the mistakes to be corrected.

However, it is not yet commenting on the main criticisms.

Long term solutions

One of three comissioners appointed to the troubled health board is promising they won't be taking a slash and burn approach to services.

Richard Thomson, who was an elected member of the sacked board, told Morning Report it had been under enormous financial pressure for several years and that had led to short-term thinking.

"I think we're going to have to look at how services are structured - I don't think that's in any doubt.

"But I think the government has given us a clear indication that it is not looking for us to go in and slash and burn and do a short term fix that will not actually solve the long term problem."


A member of the former board, John Chambers, said it struggled to get accurate information about the financial situation.

Dr Chambers says the financial team had been under pressure after cut-backs and management often had trouble producing figures in a timely manner.

He said board members were constantly being surprised by shortfalls in some areas, often amounting to hundreds of thousands, or even millions, of dollars.

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